DEPARTMENT 205 LAW AND MOTION RULINGS
Case Number: 20SMCV01196 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 WILLIAM P. HOWELL, as Trustee of the Howell Family Trust, SOUTHERN CALIFORNIA EDISON, et al., | Hearing Date: February 20, 2024 PLAINTIFF’S MOTION TO SET ASIDE |
This lawsuit arises from property damage connected to work performed by Defendant Southern California Edison’s (“SCE’s”) outside contractor, Defendant Edison Power Constructors, Inc. (“EPC”). While replacing a deteriorated SCE utility pole on Topanga Canyon Boulevard, EPC inadvertently drilled into an underground drainage culvert owned by Defendant the People of the State of California (or “Caltrans”), and then set the replacement pole into the broken pipe. During a subsequent rainstorm, the blockage to the culvert caused a mudslide on Plaintiff William Howell’s property located downhill from the damaged pipe. Plaintiff sued Caltrans for inverse condemnation. Caltrans moved for summary judgment. Plaintiff filed an untimely opposition, which the Court declined to consider. Plaintiff’s opposition was also based on a declaration from counsel that was not signed under penalty of perjury, and accordingly, much of Plaintiff’s evidence (which was attached to counsel’s declaration) is inadmissible. The Court thereafter granted summary judgment in favor of Caltrans. Plaintiff now seeks relief from the judgment based on his counsel’s purported excusable neglect in failing to timely file the opposition. Plaintiff argues the failure was an isolated mistake due to computer problems. The Court sustains Objection No. 1 and overrules Objections Nos. 2, 3 to the Declaration of Todd Lander. The Court also sustains Objection Nos. 4 and 5 to the Supplemental Declaration of Todd Lander. Pursuant to Code Civ. Proc. §473(b), both discretionary and mandatory relief is available to parties when a case is dismissed. Discretionary relief is available under the statute as “the court may, upon any terms as may be just, relieve a party or his or her legal representative from judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” (Code of Civ. Proc. § 473(b).) Alternatively, mandatory relief is available when “accompanied by an attorney’s sworn affidavit attesting to his or her mistake, inadvertence, surprise, or neglect.” (Id.) The purpose of the attorney affidavit provision is to “relieve the innocent client of the burden of the attorney’s fault, to impose the burden on the erring attorney, and to avoid precipitating more litigation in the form of malpractice suits.” (Hu v. Fang (2002) 104 Cal.App.4th 61, 64.) Under the mandatory relief provision, the court is required to grant relief if the attorney admits neglect, even if the neglect was inexcusable. (Metropolitan Service Corp. v. Casa de Palms Ltd. (1995) 31 Cal.App.4th 1481, 1487; Graham v. Beers (1994) 30 Cal.App.4th 1656, 1660.) An application for discretionary or mandatory relief must be made no more than six months after entry of the judgment, dismissal, order, or other proceeding from which relief is sought. (Code Civ. Proc. § 473(b); English v. IKON Business Solutions (2001) 94 Cal.App.4th 130, 143.) “[W]hen relief under section 473¿is¿available, there is a strong¿public¿policy¿in¿favor¿of granting relief and allowing the requesting party his or her day in court[.]” (Rappleyea v. Campbell¿(1994) 8 Cal. 4th 975, 981-82.) Only “very slight evidence” will be required to justify a court in setting aside default. (Elston v. City of Turlock (1985) 38 Cal.3d 227, 233.) “Doubts are resolved in favor of the application for relief from default.” (Id. at 235.) The Court first addresses whether mandatory relief is available where a plaintiff fails to timely serve an opposition to a motion for summary judgment. There is a split of authority as to whether mandatory relief is available to an order granting summary judgment. In Avila v. Chua¿(1997) 57 Cal. App. 4th 860, the plaintiff’s¿attorney failed to timely file oppositions to two motions for summary judgment. The trial court struck the late-filed oppositions and granted summary judgment in favor of the defendants.¿The trial court later denied a motion to vacate the summary judgment under¿section 473(b). On appeal, Division Five of the Second Appellate District held the trial court erred in denying the motion to vacate because the mandatory provision of¿section 473(b)¿applied. Relying in part on Huens v. Tatum¿(1997) 52 Cal. App. 4th 259, the court in¿Avila¿concluded the plaintiff was entitled to relief under the mandatory provision of¿section 473(b)¿because the case was “directly analogous to a default judgment.” (Avila, 57 Cal. App. 4th at 868.) According to the¿Avila¿court, the case was “of the kind which¿Huens¿found that the mandatory provisions were designed for: Appellant lost his day in court due solely to his lawyer’s failure to timely act.” (Id.) In¿English, the plaintiff filed an employment discrimination suit against the defendant, her former employer. (English, 94 Cal.App.4th at 133.)¿The defendant moved for summary judgment.¿(Id.) The plaintiff did not submit an opposition with any evidence. (Id.) Rather, the plaintiff asserted a continuance should be granted under¿section 437c, subdivision (h).¿(Id. at 133-134.)¿The trial court denied the continuance motion and subsequently granted the summary judgment motion.¿(Id.¿at 134.)¿The plaintiff then filed a¿section 473, subdivision (b)¿motion under a mandatory relief theory. (Id. at 134.)¿The plaintiff's attorney declared he erred by failing to submit evidence in opposition rather than solely arguing for a continuance. (Id.) The trial court denied the plaintiff's motion for relief from the judgment. (Id.) The Court of Appeal affirmed the denial of the plaintiff's motion for relief from the judgment.¿(Id. at 133.) The Court of Appeal examined the legislative history of the mandatory relief provision in¿section 473, subdivision (b).¿(Id. at 138–142.)¿The Court of Appeal concluded regarding dismissals: “[W]e construe the word ‘dismissal’ as having a limited meaning similar to the term ‘default judgment.’ This approach is supported by the history of the mandatory provision, set out above.”¿ The Court of Appeal found a summary judgment is not a default, default judgment, or dismissal. (Id.¿at p. 143.) As in English, Prieto v. Loyola Marymount University (2005) 132 Cal.App.4th 290, expressly rejected the holding in Avila. There, a former employee sued a university, alleging, among other things, failure to accommodate her physical disability under the California Fair Employment and Housing Act. The trial court granted the university’s motion for summary judgment and denied the former employee’s motion to vacate the judgment dismissing her complaint. The former employee sought to vacate the judgment based on the mandatory relief provision. The former employee’s attorney asserted in a declaration that he did not receive the motion for summary judgment. The Court of Appeal affirmed, holding that the mandatory relief provision of¿§ 473, subd. (b), should be limited to the narrow class of cases in which a default judgment or a dismissal has been entered. The fact that the former employee sought to rely on the mandatory “attorney-fault” provision of¿§ 473, subd. (b), was fatal to her motion to set aside the order granting summary judgment. The mandatory provision of¿§ 473, subd. (b), did not empower the trial court to set aside the summary judgment. The mandatory provision of¿§ 473, subd. (b), only empowered the trial court to set aside a default judgment or a dismissal. The Court follows the reasoning in English and its progeny. As such, Plaintiff cannot seek mandatory relief. The Court next considers whether Plaintiff is entitled to discretionary relief. Caltrans argues that Plaintiff’s counsel’s mistake is not excusable because Plaintiff had two months to file an opposition yet waited until the last minute to file, knowing that there would be no staff available to help and counsel would be away from the office. Caltrans also points out that this was not an isolated incident and counsel previously failed to timely file papers in connection with another motion. The Court agrees with Caltrans. A party who seeks discretionary relief under¿Code Civ. Proc., § 473, subd. (b) must demonstrate that the mistake, inadvertence, or general neglect was excusable. In determining whether the attorney’s mistake or inadvertence was excusable, the court inquires whether a reasonably prudent person under the same or similar circumstances might have made the same error. (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 258.) Conduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not excusable. (Id.) To hold otherwise would be to eliminate the express statutory requirement of excusability and effectively eviscerate the concept of attorney malpractice. (Id.) When the mistake is excusable and the party seeking relief has been diligent, courts have often granted discretionary relief under this provision if no prejudice to the opposing party will ensue. (Id.) Courts look with particular disfavor on a party who, regardless of the merits to his or her cause, attempts to take advantage of the mistake, surprise, inadvertence, or neglect of his or her adversary. (Id.) Here, Plaintiff had two months to file an opposition. Yet Plaintiff’s counsel waited until the last minute to file the papers even though he had completed the papers earlier. It was imprudent to wait until the last minute to file the papers – mere hours before the deadline – without staff support and from a different state. It is not conduct a reasonable person would do. Counsel maintains that he could not have submitted the papers earlier because he was waiting on his expert to sign the declaration. Yet there is no explanation why the expert could not have signed the declaration sooner. Plaintiff’s counsel also points to the press of other business. But being busy with other litigation matters is not a legitimate excuse. (Huh v. Wang (2007) 158 Cal.App.4th 1406, 1423 (concluding that the press of business alone is not sufficient grounds for discretionary relief).) The “stresses of a busy law practice,” the “hurry to meet the deadline” and “several concurrent obligations due to other pending litigation” do not constitute excusable neglect. (Ambrose v. Michelin North America (2005) 134 Cal.App.4th 1350, 1355.) Counsel’s failure to timely file the opposition was also not a one-off event. Plaintiff failed to timely file his motion for leave to amend the third amended complaint (“ATAC”). Plaintiff compounded the error by failing to timely file his reply brief in support of his motion for leave to file the ATAC. Additionally, Plaintiff was forced to file a “supplemental declaration” in support of his 473(b) motion because he “inadvertently” failed to attach all the opposition papers to his initial declaration. Plaintiff’s reliance on Communidad en Action v. Los Angeles City Council (2013) 219 Cal.App.4th 1116, 1132 is unavailing. The error, there, was a single calendaring mistake by lead counsel. It was an “isolated mistake in an otherwise vigorous and thorough presentation of Comunidad’s claims.” (Id.) The mistake here is not a calendaring error that anyone could make; counsel made the unreasonable decision of filing the papers at the last minute, when he knew there would be no staff and while he was out of state. It was also not an isolated mistake. In any event, Plaintiff was able to raise arguments in his opposition at the hearing on the motion. His counsel was given ample time to do so. The Court considered these arguments, ultimately granting the motion for summary judgment. On these facts, the Court denies the motion to set aside its order on summary judgment. Based on the foregoing, the Court DENIES the motion to set aside its order granting summary judgment in favor of Caltrans. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV00121 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 WEINBERG GONSER FROST LLP, et al., | Hearing Date: February 20, 2024 PLAINTIFF’S MOTION FOR LEAVE TO |
This case arises from an attorney-client dispute. Plaintiff Ashkan Rajaee retained Defendant Weinberg Gonser Frost LLP (“WGF”) to represent him in a dispute with a former business partner. The parties entered into a written engagement agreement (the “Agreement”). The Agreement contains an arbitration provision. The provision states that Plaintiff and WGF “agree to submit all disputes regarding any aspect of our lawyer-client relationship to binding arbitration by a single neutral arbitrator[.]” (Ex. A to Matthews Decl., at p. 5.) The provision defines “all disputes” to include “claims [Plaintiff] may have against [WGF] for malpractice, negligence, breach of contract or fiduciary duty and fraud, as well as with respect to fees and costs.” (Id.) Plaintiff signed the Agreement. (Id. at p. 6.) Plaintiff is now suing WGF for malpractice and breach of fiduciary duty in connection with their handling of an underlying arbitration proceeding. Plaintiff claims WGF failed to (1) identify and/or address numerous material omissions and erroneous provisions in an operating agreement, (2) identify and address his former business partner’s breaches of the operating agreement, (3) allege certain claims in an underlying arbitration between Plaintiff and his business partner, (4) allege meritorious affirmative defenses to the former business partner’s claims; (5) secure discovery for Plaintiff and object to discovery propounded by his business partner, (6) use discovery in a related case to dispose of certain issues, (7) object to evidence introduced by the former business partner at the arbitration hearing, and (8) call a rebuttal expert. On June 9, 2023, the Court granted WGF’s motion to compel arbitration and stayed all proceedings pending completion of the arbitration. Plaintiff now seeks leave to file a cross-complaint against Tyler Brandon Davis and TOPDEVZ, LLC who he claims engaged in identity theft. Given the stay on all proceedings, the Court DENIES Plaintiff’s motion for leave to file a cross-complaint. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV00517 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 BEVERLY HILLS IT SERVICES, et al., | Hearing Date: February 20, 2024 DEFENDANTS BEVERLY HILLS IT SERVICES AND BEVERLY HILLS IT’S MOTION FOR RECONSIDERATION |
This is theft of trade secrets case. Plaintiff Network Experts provides computer sales. consulting and IT services. Defendant Mostafa Karbalei Ahmad Baboli (“Baboli”) was employed by Plaintiff to serve as an IT specialist/director. Baboli later formed Beverly Hills IT Services and Beverly Hills Services (the “Entity Defendants” and together with Baboli, “Defendants”) which then contracted with Plaintiff to perform IT services. Baboli informed Plaintiff that the Entity Defendants would contract with Plaintiff as an independent contractor, servicing Plaintiff’s clients, while also servicing the Entity Defendants’ own clients as well. Plaintiff claims Defendants misappropriated its trade secrets to poach Plaintiff’s clients. Plaintiff also claims Baboli borrowed $9,540 pursuant to a promissory note which he has failed to repay. The operative complaint alleges claims for (1) misappropriation of trade secrets, (2) breach of promissory note, (3) breach of fiduciary duty, (4) breach of duty of loyalty, (5) unfair competition, (6) intentional interference with prospective economic relations, (7) negligent interference with prospective economic relations, (8) conversion and (9) trespass to chattel. Plaintiff served Defendants by substitute service on February 8, 2023. Service is deemed completed on the 10th day after mailing, which is February 19, 2023. Defendants’ response to the Complaint was due by March 21, 2023. Defendants failed to respond. Accordingly, default was entered against the Entity Defendants on April 27, 2023 and against Baboli on May 2, 2023. This hearing is on Entity Defendants’ motion for reconsideration of an order denying their motion to set aside default. The Entity Defendants argue they were not properly served under Code Civ. Proc. §415.20(c) and Bus. & Prof. Code §17538.5(d). The Entity Defendants claim this is a new fact, law or circumstance, warranting reconsideration. “When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown.” (Code of Civ. Proc., §1008(a).)¿ The Court overrules Plaintiff’s Objection No. 1 to the Declaration of Mostafa K. Baboli, and overrules Plaintiff’s Objection Nos. 1-2, 5 and sustains Objection Nos. 3-4, 6-8 to the Declaration of Erik Ceja. The Entity Defendants argue that they were not served in accordance with Code Civ. Proc. §415.20(c) and Bus. & Prof. Code §17538.5(d). Section 415.20(c) provides that “if the only address reasonably known for the person to be served is a private mailbox obtained through a commercial mail receiving agency [“CMRA”], service of process may be effected on the first delivery attempt by leaving a copy of the summons and complaint with the commercial mail receiving agency in the manner described in subdivision (d) of Section 17538.5 of the Business and Professions Code.” Section 17538.5(d) provides that “[u]pon receipt of any process for any mailbox service customer the CMRA owner or operator shall …. within five days after receipt, send all documents by first class mail, to the last known home or personal address of the mail receiving service customer.” The Entity Defendants argue the CMRA here failed to mail the documents to their last known home or personal address, within five days after receipt. Instead, the process server mailed the documents. The Entity Defendants rely on Kremerman v. White (2021) 71 Cal.App.5th 358 which held that plaintiff’s service was deficient where plaintiff had not established compliance with Section 17538.5(d). The Court denies the Entity Defendants’ motion for reconsideration as it fails to present any new facts, law or circumstances warranting reconsideration. As counsel concedes, the “new” argument he is making now was known to him at the time he was researching the reply (see e.g., Motion at 1:23-24), and he chose not to include it in his reply. There is a strict requirement of diligence, meaning the moving party must present a satisfactory explanation for failing to provide the evidence, different facts, or law earlier.¿ (Garcia v. Hejmadi (1997) 58 Cal. App. 4th 674, 690.)¿ Counsel has provided no explanation as to why he failed to include this argument in his reply. In any event, the Entity Defendants have not presented any admissible evidence that the CMRA in fact failed to mail the summons and complaint within five days after receipt. While Baboli claims he did not receive the summons and complaint from the CMRA, this does not foreclose the possibility that the documents were in fact mailed by the CMRA. For the foregoing reasons, the Court DENIES the Entity Defendants’ motion for reconsideration. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
HEARING DATE: February 20, 2024 | JUDGE/DEPT: Moreton/Beverly Hills, 205 | CASE NAME: Network Experts Inc. v. Beverly Hills IT Services, et al. | COMP. FILED: February 3, 2023 |
PROCEEDINGS: REQUEST FOR ENTRY OF DEFAULT JUDGMENT MOVING PARTY: Network Experts, Inc. RESPONDING PARTY: Beverly Hills IT Services and Beverly Hills IT This is theft of trade secrets case. Plaintiff Network Experts provides computer sales, consulting and IT services. Defendant Mostafa Karbalei Ahmad Baboli (“Baboli”) was employed by Plaintiff to serve as an IT specialist/director. Baboli later formed Beverly Hills IT Services and Beverly Hills Services (the “Entity Defendants” and together with Baboli, “Defendants”) which then contracted with Plaintiff to perform IT services. Baboli informed Plaintiff that the Entity Defendants would contract with Plaintiff as an independent contractor, servicing Plaintiff’s clients, while also servicing the Entity Defendants’ own clients as well. Plaintiff claims Defendants misappropriated its trade secrets to poach Plaintiff’s clients for their competitive business. Plaintiff also claims Baboli borrowed $9,540 pursuant to a promissory note which he has failed to repay. The operative complaint alleges claims for (1) misappropriation of trade secrets, (2) breach of promissory note, (3) breach of fiduciary duty, (4) breach of duty of loyalty, (5) unfair competition, (6) intentional interference with prospective economic relations, (7) negligent interference with prospective economic relations, (8) conversion and (9) trespass to chattel. The complaint seeks unspecified damages, interest, attorney’s fees and costs. Plaintiff served the Entity Defendants by substitute service on February 8, 2023. Service is deemed completed on the 10th day after mailing, which is February 19, 2023. Defendants’ response to the Complaint was due by March 21, 2023. Defendants failed to respond. Accordingly, default was entered against the Entity Defendants on April 27, 2023. This hearing is on Plaintiff’s request for entry of default judgment against the Entity Defendants. The Court previously denied the request because (1) Plaintiff’s complaint failed to specify any damages, as required under Code Civ. Proc. § 580, (2) Plaintiff’s request for entry of default judgment sought punitive damages, although Plaintiff failed to serve a statement of damages specifying the amount of punitive damages it sought before entry of default pursuant to Code Civ. Proc. §425.114, and (3) Plaintiff’s request for entry of default judgment sought default judgment against Baboli, though the Court set aside entry of default judgment against him. Plaintiff now argues that while damages were not specified in its prayer for relief, damages were stated elsewhere in the body of its complaint. Plaintiff also now abandons its claim for punitive damages and for request of entry of default judgment against Baboli. Default judgment against Defendants for a total of $250,804.64 consisting of (1) $123,192,38 in special damages, (2) $23,138.27 in prejudgment interest at 10% per annum, (4) $102,764.10 in attorneys’ fees, and (5) $1,709.89 in costs. Code of Civil Procedure section 585 sets forth the two options for obtaining a default judgment. First, where the plaintiff’s complaint¿seeks compensatory damages only, in a sum certain which is readily ascertainable from the allegations of the complaint or statement of damages, the clerk may enter the default judgment for that amount. However, if the relief requested in the complaint is more complicated, consisting of either nonmonetary relief, or monetary relief in amounts which require either an accounting, additional evidence, or the exercise of judgment to ascertain, the plaintiff must request entry of judgment by the court. In such cases, the plaintiff must affirmatively establish his entitlement to the specific judgment requested.¿ (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 287.) Section 585 also allows for interest, costs and attorney fees, where otherwise allowed by law. (Code of Civ. Proc. 585(a).) Multiple specific documents are required, such as: (1) form CIV 100, (2) a brief summary of the case; (3) declarations or other admissible evidence in support of the judgment requested; (4) interest computations as necessary; (5) a memorandum of costs and disbursements; (6) a proposed form of judgment; (7) a dismissal of all parties against whom judgment is not sought or an application for separate judgment under CCP § 579, supported by a showing of grounds for each judgment; (8) exhibits as necessary; and (9) a request for attorneys’ fees if allowed by statute or by the agreement of the parties. (CRC Rule 3.1800.) The relief granted to a plaintiff on a request for entry of default judgment “cannot exceed that which [is] demanded in [the] complaint . . . .” (Code Civ. Proc. § 580.)¿ Section 580¿exists to insure that a defaulting defendant has adequate notice of the judgment that might (and probably will) be entered against him, and to permit an enlightened decision about whether to appear and defend or to give up that right “in exchange for the certainty that he cannot be held liable for more than a known amount.” (Ely v. Gray¿(1990) 224 Cal. App. 3d 1257, 1261;¿In re Marriage of Lippel¿(1990) 51 Cal. 3d 1160, 1166;¿Greenup v. Rodman¿(1986) 42 Cal. 3d 822, 826.) It follows that the amount of damages communicated to the defaulting defendant sets the ceiling on the plaintiff's recovery, and that a default judgment in excess of that amount is void. (Schwab v. Rondel Homes, Inc. (1991) 53 Cal. 3d 428, 433;¿Greenup v. Rodman,¿ 42 Cal. 3d at 824.) Here, paragraph 25 of Plaintiff’s complaint specifies $90,000 in damages. It states: “Specifically, Defendants have intentionally and successfully interfered with Plaintiff’s relations with at least two clients. One such client had committed to retain Plaintiff to perform an approximately $90,000 project. However, after Defendants interfered with the relationship, the client terminated its relationship with Plaintiff and started a direct relationship with Defendants’ competing business. The same is true for at least one other client as well.” These damages are sought in connection with Plaintiff’s claims for misappropriation of trade secrets, breach of fiduciary duty, breach of duty of loyalty, unfair competition, intentional interference with prospective economic relations, and negligent interference with prospective economic relations. However, damages cannot be sought in connection with a claim for unfair competition. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1150.) Notwithstanding, the Court concludes Plaintiff has specified $90,000 in damages as to the other remaining claims. Plaintiff also seeks an additional $5,073.94 on its claim for breach of the promissory note. But that claim was only asserted against Baboli, not the Entity Defendants. Accordingly, Court declines to include that amount in the default judgment. Plaintiff further seeks an additional $27,755.17 for damage to a car it loaned to Baboli as well as other equipment Baboli failed to return. These damages are sought in connection with Plaintiff’s claims for conversion and trespass to chattel. However, these amounts are not specified anywhere in the complaint, and therefore, cannot be sought on a request for entry of default judgment. Plaintiff also requests injunctive relief: prohibiting Defendants, and all other persons or entities acting in concert with or on their behalf from directly or indirectly disclosing, using, copying, selling, transmitting or otherwise misappropriating Plaintiff’s Trade Secrets and Confidential Information;
prohibiting Defendants from continuing services for any client acquired due to use of Plaintiff’s Trade Secrets or Confidential Information;
prohibiting Defendants from continuing services for any client that was previously a client or a potential client of Plaintiff;
ordering Defendants and all other persons or entities acting in concert with or on their behalf to preserve and return to Plaintiff all electronic files, hard copy documents, including copies thereof, and other material and property belonging to Plaintiff in their possession, custody and/or control, including its Trade Secrets and Confidential Information;
ordering Defendants, at their own cost, to allow a third party computer forensic company to conduct a confidential forensic analysis on Defendants’ servers to ensure that Plaintiff’s Trade Secret and Confidential Information or any portion thereof is not maintained on them,
ordering Defendants, at their own cost, to allow a third party forensic company to obtain an image of the hard drive on all of the Competing Center’s laptops, computers, cell phones and other electronic storage devices issued to Defendants as well as an image of all of his personal such devices, in order to conduct a similar confidential forensic analysis; and
ordering Defendants, at their own cost, to allow a third party forensic company to obtain copies of all emails sent by Defendants to date in connection with their competing business, in order to analyze any emails that contain Plaintiff’s Trade Secrets and Confidential Information.
“Trade Secret” is defined as “lists with information including, but not limited to, the names, addresses, phone numbers, system, configurations, network set ups, customer order preferences, particular needs and characteristics, functions, and other information for each client.” (Compl. ¶15.) “Confidential Information is defined as “certain material information about Network Experts’ business operations that, even if not necessarily trade secret, were nevertheless confidential, including without limitation, information concerning Network Experts’ clients, suppliers, employees, contractors, contract terms, pricing, financing, and other business practices.” (Id. ¶16.) While Plaintiff is entitled to an injunction, its current request for¿injunctive relief is overbroad. Given the nature of the¿default judgment requested, the Court is concerned that a broad injunction will lead to satellite litigation over the injunction's applicability to specific business information. The Court accordingly grants the injunctive relief only as to the information specifically identified in paragraphs 15-16 of the Complaint. Plaintiff also seeks attorneys’ fees and costs. Plaintiff argues that such fees and costs are recoverable under the Promissory Note which states Plaintiff is entitled to recover “all costs of collection, including a reasonable attorneys’ fees in case the principal of this note or any payment on the principal or any interest thereon is not paid at the respective maturity thereof, or in case it becomes necessary to protect the security hereof, whether suit be brought or not.” However, the Promissory Note was entered only as between Plaintiff and Baboli. Accordingly, the attorneys’ fees provision in the Promissory Note is not enforceable against the Entity Defendants. Further, while Plaintiff may recover costs even absent an agreement, Plaintiff failed to complete the memorandum of costs in item 7 of the CIV 100 form. Use of CIV 100, item 7, is mandatory if costs are requested. (Cal. Rules of Court 3.1800(a).) Finally, Plaintiff seeks prejudgment interest pursuant to Civ. Code § 3288. Section 3288 “allows interest from the date of monetary loss at the discretion of the trier of fact even if the damages are unliquidated.” (Stein v. Southern Cal. Edison Co. (1992) 7 Cal.App.4th 565, 572.) Plaintiff seeks prejudgment interest from January 1, 2022, when Plaintiff began working with Defendants. Plaintiff fails to explain, however, how this date is the start date of the tortious act causing their damages. (Newby v. Vroman¿(1992) 11 Cal.App.4th 283, 289, 14 Cal. Rptr. 2d 44 “[W]here prejudgment interest is awarded under [Civil Code] section¿3288¿in order to compensate respondents fully for their loss, that interest must first be calculated on the entire judgment . . . from the date of the tortious act proximately causing their damages.").) Accordingly, the Court declines to award prejudgment interest. ¿ For the foregoing reasons, Plaintiff Network Express Inc.’s Request for Default Judgment is GRANTED IN PART and DENIED IN PART as to Defendants Beverly Hills IT Services and Beverly Hills IT. Judgment is awarded in the sum of $90,000, and injunctive relief is granted.
Case Number: 23SMCV01190 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 MICHAEL NIEMEYER, et al., | Hearing Date: February 20, 2024 DEFENDANT MICHAEL NIEMEYER’S DEMURRER TO AND MOTION TO STRIKE FIRST AMENDED COMPLAINT |
Plaintiff Johnny Rodriguez was a patron of a nightclub called “Micky’s West Hollywood” on February 24, 2023. “Micky’s” is operated by Defendant WHBT, Inc. Plaintiff was allegedly told by an employee that he had to leave the premises. Plaintiff alleges that the “door person” named “Eric” slapped the phone out of his hand, tried to step on it, tackled Plaintiff to the floor, punched his face and kicked him. (First Amended Complaint (“FAC”) ¶¶4-5.) As a result, Plaintiff’s nose was fractured, his ribs and face bruised, and the inside of his lip was cut. (Id. ¶6.) Defendant Michael Niemeyer is the owner and president of WBHT, Inc. (Id. ¶1.) Plaintiff alleges Niemeyer is the alter ego of WHBT, Inc. (Id.) Plaintiff alleges that Niemeyer “ratified the actions, inaction and conduct of all the other Defendants. There is such a unity of interest and ownership between [WHBT, Inc.] and owner/president Defendant NIEMYER that the separate personalities of [WHBT, Inc.] and NIEMEYER do not in reality exist; there may be an inequitable result if the acts, in action, and conduct in question are treated as those of [WHBT, Inc.] alone. Plaintiff is informed and believes and alleges thereon that NIEMEYER may be selling MICKY’s in the near future. As a result, there may be an inequitable result if the acts in question are treated as those of MICKY’s alone as there may be diversion of assets from a corporation to another person or entity to the detriment of creditors,” (FAC ¶1.) The operative complaint alleges five causes of action for (1) battery, (2) intentional infliction of emotional distress, (3) negligence, (4) premises liability and (5) negligent hiring, training and/or retention. This hearing is on Niemeyer’s demurrer and Defendants’ motion to strike. Niemeyer demurs to the Complaint on grounds that Plaintiff’s allegations against him are based solely on alter ego liability but Plaintiff has not sufficiently alleged there is a unity of interest between Niemeyer and WHBT, Inc. or that fraud or injustice would result, both of which are required to allege alter ego liability. Defendants also move to strike (1) Plaintiff’s claim for punitive damages because Plaintiff’s allegations are merely conclusory and do not show how Defendants ratified the conduct of “Eric”, (2) allegations relating to fifteen Yelp reviews documenting complaints of abuse by WHBT’s personnel because they are irrelevant and do not tend to prove Plaintiff’s allegation that he was a assaulted by “Eric”, and (3) prior lawsuits and other claims against Defendants because they do not concern any alleged misconduct by “Eric.” “[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 (in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents).) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.) Further, the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436 subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436 subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.) Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”).) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Code Civ. Proc. §§ 430.41 and 435.5 requires that before the filing of a demurrer or motion to strike, the moving party “shall meet and confer in person or by telephone” with the party who filed the pleading that is subject to demurrer or motion to strike for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer or motion to strike. (Code Civ. Proc. §§ 430.41(a), 435.5(a).) The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc. §§ 430.41(a)(2), 435.5(a)(2).) Thereafter, the moving party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc. §§ 430.41(a)(3), 435.5(a)(3).) Defendant submits the Declaration of Jamison Rayfield which shows the parties met and conferred by telephone, as required under §§ 430.41 and 435.5(a). Niemeyer argues that Plaintiff’s alter ego allegations are conclusory and not supported by any facts. The Court agrees. “[A]lter ego is an extreme remedy, sparingly used.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539.) “It is a limited doctrine, invoked only where recognition of the corporate form would work an injustice to a third person.” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1285.) Conclusory allegations of “alter ego” status are insufficient to state a claim. Rather, a plaintiff must allege specifically the elements of alter ego liability, as well as facts supporting each. (Leek v. Cooper (2011) 194 Cal.App.4th 399, 414; Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749.) “Two requirements must be met to invoke the alter ego doctrine: (1) ‘[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist’; and (2) ‘there must be an inequitable result if the acts in question are treated¿as those of the corporation alone.’” (Turman v. Superior Court (2017) 17 Cal.App.5th 969, 980-981.) As to unity of interest, courts use several factors in determining whether there is such a unity of interest between an entity and an individual: (1) formation and use of a corporation to transfer to it the existing liability of another person or entity, (2) diversion of assets from a corporation by or to a stockholder or other person or entity to the detriment of creditors, (3) commingling of funds and other assets, (4) unauthorized diversion of corporate funds or assets to other than corporate uses, (5) the use of corporate entity to procure labor, services or merchandise in another person or entity, (6) the holding out by an individual that he is personally liable for the debts of the corporation, (7) disregard of legal formalities and failure to maintain an arm’s length relationship among related entities, (8) failure to obtain authority to issue stock or to subscribe to or issue the same, (9) failure to maintain minutes or adequate corporate records, (10) the treatment of an individual of the assets of the corporation as his own, (11) the use of a corporation as a mere shell, instrumentality or conduit for a single venture or business of an individual or another corporation, (12) failure to adequately capitalize a corporation, (13) the total absence of corporate assets, i.e., undercapitalization, or (14) diversion of company assets. (See Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 512-513.) Here, Plaintiff alleges that Niemeyer is the “owner/president.” But ownership of all the stock and control and management of a corporation by one individual is not of itself sufficient to support a unity of interest. (Leek, 194 Cal.App.4th at 415.) In Leek, the court recognized that even “[a]n allegation that a person owns all of the corporate stock and makes all the management decisions is insufficient to cause the court to disregard the corporate entity.” (Id.) Plaintiff further alleges Niemeyer may be selling Micky’s which would result in a diversion of assets to the detriment of creditors. This allegation is too conclusory to support a claim of alter ego liability. The implication is that Plaintiff may have difficulty enforcing any future judgment against Micky’s after it is sold. But the alter ego doctrine “does not guard every unsatisfied creditor of a corporation but instead affords protection where some conduct amounting to bad faith makes it inequitable for the corporate owner to hide behind the corporate form. Difficulty in enforcing a judgment or collecting a debt does not satisfy this standard.” (Sonora Diamond, 83 Cal.App.4th at 539.) Plaintiff also fails to sufficiently plead facts to support the second alter ego requirement of fraud or injustice. Plaintiff’s sole allegation of injustice is that “there may be an inequitable result if the acts, in action, and conduct in question are treated as those of [WHBT, Inc.’s] alone.” (FAC ¶1.) This conclusory allegation is completely deficient; the complaint fails to allege facts showing that application of the alter ego doctrine is necessary to prevent fraud or injustice. WHBT Inc. is not alleged to be insolvent or unable to respond to any judgment which may be imposed upon it. The potential sale of Micky’s does not by itself mean that WHBT, Inc. will be unable to respond to any judgment against it. Leek is instructive. There, the pertinent allegations of the complaint were: “(1) that the plaintiffs were employed by Auburn Honda and Jay Cooper; (2) that Auburn Honda is a corporation; (3) that Defendant Cooper is the sole owner of Auburn HONDA, owning all of its stock and making all of its business decisions personally and (4) that all defendants were the agents, servants and employees of their co-defendants, and in doing the things hereinafter alleged were acting within the scope and authority as such agents, servants and employees and with the permission and consent of their co-defendants.” (Id. at 415.) The Court concluded that “[t]he allegations neither specifically alleged alter ego liability nor alleged facts showing a unity of interest and inequitable result from the treatment of the corporation as the sole actor.” (Id.) As in Leek, the allegations here are conclusory, and there are no facts alleged to show either a unity of interest or an inequitable result. Plaintiff argues that the “[i]nitial pleading requirements for alleging alter ego status in California are minimal,” citing to two cases, First W. Bank & Tr. Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915 and Neilson v. Union Bank of California (C.D. Cal. 2003) 290 F. Supp. 2d 1101, 1116. But neither case says alter ego liability may be pleaded in a conclusory fashion. To the contrary, in Neilson, the court expressly held “[c]onclusory allegations of ‘alter ego’ status are insufficient to state a claim.¿Rather, a plaintiff must allege specifically both of the elements of alter ego liability, as well as facts supporting each.” (290 F. Supp. 2d 1116.) Moreover, the court there found that the plaintiff had not sufficiently pled alter ego, because the complaint failed to allege the defendant engaged in any bad faith conduct in its acquisition and/or management of the entity. Plaintiff alleged only that the entity does not presently have sufficient funds to pay a money judgment in the case. (Id. at 1117.) This allegation is more specific than that made by Plaintiff here, yet the Neilson court concluded it was inadequate. (Id.) Also, unlike here, in Bookasta, the plaintiff set forth specific allegations supporting a finding of alter ego liability including that the individual defendants “dominated” the affairs of the corporation; that a “unity of interest and ownership” existed between defendants and the corporation; that the corporation is a “mere shell and naked framework” for individual manipulations; that its income was diverted to the use of the individual defendants; that the corporation was, in effect, inadequately capitalized; that the corporation failed to issue stock and to¿abide by the formalities of corporate existence; that the corporation is and has been insolvent; and that adherence to the fiction of separate corporate existence would, under the circumstances, promote injustice. (267 Cal.App.2d at 915-916.) These allegations are far more specific than those made by Plaintiff here. Accordingly, the Court sustains Niemeyer’s demurrer without leave to amend. Defendants move to strike allegations relating to fifteen Yelp reviews complaining of abuse by Defendants’ staff on the ground they are irrelevant to Plaintiff’s allegations that he was assaulted by “Eric.” The Court agrees in part. Yelp reviews related to dissimilar complaints of unspecified staff are irrelevant and should be stricken. (See FAC, 4:10-11, 5:20-6:3, 6:5-8, 6:12-21, 6:21-7:9, 7:10-15, 7:16-21, 7:22-8:3, 8:9-14, 8:15-25, 8:26-28.) However, Yelp reviews relating to alleged abuse by “Eric” are potentially relevant and should not be stricken. (See FAC p. 4:26-5:7, 6:9-11, 8:4-8, 9:10-10:10.) These latter allegations may be relevant to show advance knowledge on the part of Defendants about the unfitness of “Eric.” Defendants also move to strike allegations in paragraphs 13 and 14 of the FAC relating to complaints and other claims by Micky’s customers. The allegations do not reference “Eric”. None of the allegations tend to prove Defendants had previous knowledge of “Eric’s” unfitness, and ultimately none of these allegations are related to Plaintiff’s claims. Accordingly, the Court grants the motion to strike these allegations. Defendants also move to strike Plaintiff’s claim for punitive damages on the ground Plaintiff has failed to set forth sufficient facts to support a finding of malice, oppression or fraud. The Court disagrees. Civil Code § 3294(a) authorizes the recovery of punitive damages in non-contract cases “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” (1) ‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (2) ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (3) ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the party of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” Civ. Code § 3294(c)(1)-(3). “Despicable conduct” that rises to the level of supporting an award of punitive damages against a defendant is that which is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people” and has been described as “conduct…having the character of outrage frequently associated with a crime.” (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.) “Conscious disregard” means “the defendant was aware of the probable dangerous consequences of his conduct, and that he willfully and deliberately failed to avoid those consequences.” (Hoch v. Allied-Signal, Inc. (1994) 25 Cal.App.4th 1269, 1287.) To be liable for punitive damages, the defendant must “have actual knowledge of the risk of harm it is creating, and in the face of the knowledge, fail to take steps it knows will reduce or eliminate the risk of harm.” (Ehrhardt v. Brunswick, Inc. (1986) 186 Cal.App.3d 734, 742.) Punitive damages are appropriate if the defendant’s acts are reprehensible, fraudulent or in blatant violation of law or policy. (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1051.) “The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages.” (Tomaselli, 25 Cal.App.4th at 1287.) “Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.” (Id.) Civ. Code § 3294(b) precludes an award of punitive damages against an employer absent facts that establish “the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud or malice. With respect to a corporate employer, the advantage knowledge and conscious disregard, authorization, ratification or act of oppression, fraud or malice must be on the part of an officer, director or managing agent of the corporation.” Here, Plaintiff alleges he was kicked and punched by “Eric”, and the actions of “Eric” were ratified by Defendants. (FAC ¶10.) Plaintiff alleges that “NIEMEYER and MICKY’S directed the ‘door person’ to use force on Plaintiff; NIEMEYER and MICKY’S had advance notice of the unfitness of the ‘door person’; and NIEMEYER ratified the conduct in his capacity as a managing agent of WHBT.” (Id.) Plaintiff alleges Defendants had advance notice of the unfitness of “Eric” due to prior customer complaints in Yelp reviews, and yet continued to employ him with a conscious disregard of the rights and safety of others. These facts are sufficient to support a claim for punitive damages. Accordingly, the Court denies the motion to strike the claim for punitive damages. Based on the foregoing, the Court SUSTAINS Niemeyer’s demurrer without leave to amend and GRANTS IN PART and DENIES IN PART Defendants’ motion to strike. The Court strikes 4:10-11, 5:20-6:3, 6:5-8, 6:12-21, 6:21-7:9, 7:10-15, 7:16-21, 7:22-8:3, 8:9-14, 8:15-25, 8:26-28 and paragraphs 13 and 14 of the First Amended Complaint. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV02774 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 ONALIE ELEANOR JOHANNA MARCOTT, | Hearing Date: February 20, 2024 DEFENDANT’S MOTION FOR ORDER TO COMPEL PREMIERE CHIROPRACTIC & SPORTS MEDICINE TO COMPLY WITH PRODUCTION OF BUSINESS RECORDS OF PLAINTIFF AND FOR MONETARY SANCTIONS IN THE AMOUNT OF |
This action arises from a car accident. Defendant Onalie Eleanor Johanna Marcott was driving her 2018 Kia Optima, with Plaintiff Victoria Robertson as a passenger, when it collided with non-party Paul Rafferty’s 2019 Volkswagen Golf. Plaintiff claims Defendant was driving negligently and recklessly. The operative complaint alleges two claims for motor vehicle and general negligence. On September 7, 2023, Defendant served a Deposition Subpoena for Production of Business Records (Subpoena) to the custodian of records of Premiere Chiropractic & Sports Medicine (“Deponent”). The Subpoena asked the Deponent to produce the following: “Any and all medical records, doctors’ reports, notes, memoranda, correspondence, videotapes, audio tapes, results of all tests, nurse’s notes, physical therapy notes, progress notes, surgical notes, surgical videotapes, sign in sheets, patient information sheets and arthrograms pertaining to Victoria Robertson, including diagnosis as to condition and prognosis for recover and any other information to the treatment of said individual. Include: ANY AND ALL X-RAYS, MRI’S, CT SCANS, RADIOLOGY FILMS, RADIOLOGY REPORTS & BILLING RECORDS. THIS REQUEST INCLUDES, BUT IS NOT LIMITED TO ALL RECORDS STORED ELECTRONICALLY OR DIGITALLY SUCH AS COMPUTERS, COMPUTER HARD DRIVES, ZIP DISKS, CD ROMS, FLOPPY DISKS, TAPE DRIVES AND ANY OTHER DIGILGAL MEDIA. ***INCLUDE RECORDS FROM PREMIER SPORTS MEDICINE MEDICAL GROUP FOR DATES OF 08/01/2013 TO PRESENT.” The Subpoena requested production of records to be served at Knox Legal Service (“Knox”) by September 28, 2023. (Id.) Deponent did not produce the requested documents and did not serve any objections. (Foster Decl. ¶¶ 8, 9.) Plaintiff did not move to quash the Subpoena. (Id. ¶10.) Knox contacted Deponent, which twice indicated it would produce the records. (Id. ¶¶13, 17.) To date, however, Deponent has not produced the records. (Id. ¶¶14, 18.) This hearing is on Defendant’s motion to enforce the deposition subpoena and for sanctions in the amount of $1,085. Defendant argues the records are relevant to Plaintiff’s damages claim. Plaintiff has identified Deponent as a healthcare provider from whom she has sought treatment for injuries she alleges in this case. (Id. ¶20.) And Deponent has not stated any good cause for refusing to comply with the Subpoena. No opposition was filed. Where the witness whose deposition is sought is not a party, a subpoena must be served to compel his or her production of documents. (Code Civ. Proc., § 2020.010, subd. (b).) A deposition subpoena may command only the production of business records for copying without attendance at deposition. (Code Civ. Proc., § 2020.020, subd. (b).) The subpoena need not be accompanied by an affidavit or declaration showing good cause for production of the records. (Code. Civ. Proc., §2020.410, subd. (c).) The Discovery Act does not define “business records,” but the term includes every kind of record maintained by every kind of business, governmental entity, profession, or occupation. (Evid. Code, §§ 1270, 1560, subd. (a).)¿¿ Personal service of a deposition subpoena obligates any resident of California to appear, testify, and produce whatever documents or things are specified in the subpoena. (Code Civ. Proc., § 2020.220, subd. (c).) If a non-party disobeys a deposition subpoena, the subpoenaing party may seek a court order compelling the non-party to comply. (Code Civ. Proc., § 2025.480, subd. (b).) A non-party opposing such motion without justification is subject to sanctions. (Code Civ. Proc., §§ 1987.2, sudd. (a), 2020.030, 2025.480.)¿¿ The Court first considers whether Defendant’s motion is timely. Section 2025.480(a) provides that a motion to compel shall be made no later than 60 days after “completion of the record of the deposition.” With respect to a Deposition Subpoena for Business Records, the¿objections served in response to business records subpoenas constitutes a record of a deposition. (Unzipped Apparel, LLC v. Bader¿(2007) 156 Cal. App. 4th 123, 136.)¿ Here, Deponent did not serve any objections, and accordingly, the 60 day period has not yet run, and Defendant’s motion to compel is timely. The Court next considers the merits of the motion. The Court concludes the discovery sought is relevant to Plaintiff’s damages claim, as Plaintiff has identified Deponent as a healthcare provider from whom she sought treatment for injuries she is alleging in this case. Plaintiff has not moved to quash the subpoena on privacy grounds, and in fact, any right to privacy is waived as plaintiff has put her treatment at issue in the case. (San Francisco v. Superior Court of San Francisco (1951) 37 Cal.2d 227, 232 (a plaintiff’s right to medical privacy is waived “[w]hen the patient himself discloses those ailments bringing an action in which they are in issue”).) Further, Deponent has not stated any good cause to resist production. Indeed, it made no objections to the Subpoena. The Court next considers Defendant’s request for sanctions. Section 2025.480 provides that the court “shall impose a monetary sanctions …. against any party, person or attorney who unsucessfully makes or opposes a motion to compel an answer or production, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust.” Deponent did not oppose this motion. Thus, Section 2025.480 does not support the requested sections and the request is denied. For the foregoing reasons, the Court GRANTS the motion to compel compliance with subpoena and DENIES the request for sanctions. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV03688 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 MISSISSIPPI CREATIVE OFFICES, LLC, CHICKEN SOUP FOR THE SOUL ENTERTAINMENT, INC., et al., | Hearing Date: February 20, 2024 PLAINTIFF’S MOTION FOR ENTRY OF |
This is a breach of commercial lease case. Plaintiff Mississippi Creative Offices, LLC (“Landlord”) leased premises located at 11801 Mississippi Ave, First Floor, Los Angeles, California (the “Premises”) to Defendant Chicken Soup for the Soul Entertainment, Inc. (“Tenant”). Tenant failed to pay rent and other amounts due under the Lease. As a result, Landlord initiated an unlawful detainer action. On August 27, 2023, the parties voluntarily entered into a written settlement agreement, pursuant to Code Civ. Proc. § 664.6, titled “Unlawful Detainer Stipulated Judgment” (hereinafter “Stipulated Judgment.”) (Ex. 1 to Tabibi Decl.) The parties subsequently entered into three amendments to the Stipulated Judgment. (Exs. 2-4 to Tabibi Decl.) Paragraphs 1 and 2 of the third amendment provided for payments of $5,591.53 and $58,664.68 on December 1, 2023 and January 1, 2024. (Ex. 4 to Tabibi Decl.) Tenant failed to make any such payments. This hearing is on Landlord’s motion for entry of judgment pursuant to stipulation. Under the Stipulated Judgment, if Tenant breached its obligation to timely pay any of its monthly settlement payments, then Tenant agreed this Court may enter the Stipulated Judgment. Code Civ. Proc. §664.6 provides that a court may upon motion, enter judgment pursuant to the terms of a signed, written settlement agreement between the parties. The court retains jurisdiction over the parties to enforce the settlement until performance in full of its terms. (Id.) This statute provides an expedited procedure for enforcing a settlement, relieving the moving party from filing a new lawsuit to enforce the settlement agreement. (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360.) A trial court retains jurisdiction to enforce a settlement under §664.6 where so requested by the parties in a signed settlement agreement. (Hines v. Lukes (2008) 167 Cal.App.4th 1174, 1183.) Here, the Stipulated Judgment and its amendments provide that the Court shall retain the jurisdiction to enforce and carry out the terms of the Stipulated Judgment pursuant to Code Civ. Proc. §664.6. (Exs. 1-4 to Tabibi Decl.) Under the Stipulated Judgment, Landlord has the right to seek, by way of ex parte application to this Court, an immediate money judgment in the form of the Stipulated Judgment, if Tenant breaches any obligation of the Stipulation, including failure to timely pay any monthly settlement payment. (Ex. 1 to Tabibi Decl.) Tenant “consents to enter this judgment by any judge or commissioner of this court and further hereby waives any right to any post judgment motion or appeal, however [Tenant] shall have the right to contest any default/breach claimed by [Landlord]”. (Id.) Tenant reaffirmed these obligations in each and every amendment to the Stipulated Judgment. (Exs. 2-4 to Tabibi Decl.) It is undisputed that Tenant failed to pay the monthly payments due in December 2023 and January 2024. (Tabibi Decl. ¶¶ 11-12.) Pursuant to the Stipulated Judgment and the second to fourth amendments, Landlord is entitled to (1) money judgment in the total amount of $2,475,856.24, (2) judgment for possession of the Premises and (3) termination of the lease agreement for the Premises. (Exs. 1, 4 to Tabibi Decl.; Tabibi Decl. ¶ 15.) Based on the foregoing, the Court GRANTS Plaintiff Mississippi Creative Offices, LLC’s motion for entry of judgment pursuant to stipulation. The Court grants (1) money judgment in the total amount of $2,475,856.24, (2) possession of the Premises to Landlord, and (3) termination of the lease agreement for the Premises. Plaintiff is to submit a new proposed judgment. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV04600 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 MICHAEL SARLO AND LORY SARLO as Trustees of the ATLANTIS TRUST dated November 8, 2007, et al., | Hearing Date: February 20, 2024 DEFENDANTS MICHAEL SARLO AND LORY SARLO’S DEMURRER AND MOTION TO STRIKE COMPLAINT |
This case arises from alleged violations of the Unruh Civil Rights Act (“UCRA”). Plaintiff Lewis Lingsweiler requires a wheelchair or walker for mobility. Plaintiff visited Detour Bistro and Bar (the “Business”), which is owned and operated by Defendants Michael and Lory Sarlo as trustees of the Atlantis Trust dated November 8, 2007. Plaintiff alleges the Business’s parking lot was not in compliance with the Americans with Disabilities Act Accessibility Guidelines (“ADAAG”). The operative first amended complaint (“FAC”) alleges a single claim for violation of the UCRA. This hearing is on Defendants’ demurrer and motion to strike. Defendants argue that a demurrer should be sustained because Plaintiff’s complaint is uncertain and fails to specify how Defendants violated the ADAAG. Defendants also move to strike the claim for the same reason. No opposition was filed as of the posting of this tentative ruling. A demurrer may be general or special. A¿special demurrer for uncertainty is “disfavored.” (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.) Nevertheless, a demurrer for uncertainty may be sustained “where the complaint is so bad that defendant cannot reasonably respond—i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her.” (Weil & Brown, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A at ¶ 7:84, citing¿Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) The role of a general demurrer, on the other hand, is to “test the legal sufficiency of a complaint.” (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994, citations omitted.) On a general demurrer, the court must liberally construe the complaint in the plaintiff or cross-complainant's favor.¿(Code Civ. Proc., § 452.)¿ “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)¿ A demurrer “admit[s] all the properly pleaded material facts” and “even the most improbable alleged facts” are accepted as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) However, the court does not “assume the truth of contentions, deductions or conclusions of law.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, citations omitted.) Further, the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.) Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”).) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Code Civ. Proc. §§ 430.41 and 435.5 requires that before the filing of a demurrer or motion to strike, the moving party “shall meet and confer in person or by telephone” with the party who filed the pleading that is subject to demurrer or motion to strike for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer or motion to strike. (Code Civ. Proc. §§ 430.41(a), 435.5(a).) The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc. §§ 430.41(a)(2), 435.5(a)(2).) Thereafter, the moving party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc. §§ 430.41(a)(3), 435.5(a)(3).) Defendants submit the Declaration of Graham Ulyshen which shows the parties met and conferred by telephone, as required under §§ 430.41 and 435.5(a). Defendants argue the FAC does not state facts sufficient to demonstrate that Defendants violated UCRA. The Court disagrees. The FAC alleges that Defendants violated UCRA because they had an accessible parking area whose slope exceeds ADAAG specifications, cracked and broken surfaces in the accessible parking area, and lack of an accessible route leading from the accessible parking area to the entrance of the Business. (Compl. ¶14.) These facts are sufficiently specific to put Defendants on notice of the claims against them. The complaint is not so bad that Defendants cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against them. Any ambiguities can be clarified through the use of discovery. (Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal. App. 4th 1125, 1135 (a demurrer for uncertainty is a¿special demurrer that is¿disfavored and strictly construed because “ambiguities can reasonably be clarified under modern rules of¿discovery”).) Further, demurrers will be overruled where, as here, the facts relating to the parking area are presumptively within the knowledge of the demurring party. (Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Accordingly, the Court overrules the demurrer. As the motion to strike is based on the same grounds as the demurrer, the motion is also denied. For the foregoing reasons, the Court OVERRULES the demurrer and DENIES the motion to strike. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV04903 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 RAR2-7141 SANTA MONICA BLVD, LLC, JOSE ALBERTO ORTIZ MACHICOTE, et al., | Hearing Date: February 20, 2024 DEFENDANT’S MOTION TO VACATE |
This is an unlawful detainer action. Plaintiff RAR2-7141 Santa Monica Blvd, LLC entered into a written lease agreement with Defendant Jose Alberto Ortiz Machicote for property located at 7141 Santa Monica Boulevard #616 West Hollywood, California (the “Premises”). Tenant failed to pay rent, and accordingly, Landlord filed an unlawful detainer action. On January 12, 2024, the Court held a half-hour bench trial. Tenant failed to appear. Evidence was presented by Landlord, and at the conclusion of the trial, the Court awarded judgment against Tenant. This hearing is on Tenant’s motion to vacate entry of default judgment. Tenant argues he was not properly served with the complaint and summons; Tenant did not respond to Landlord’s complaint because he attempted in good faith, through counsel to settle the case and hoped to avoid any filing and appearance fees, and he is entitled to mandatory relief due to an unspecified error by his attorney. “Compliance with the statutory procedures for service of process is essential to establish personal jurisdiction. Thus, a default judgment entered against a defendant who was not served with a summons in the manner prescribed by statute is void. Under section 473, subdivision (d), the court may set aside a default judgment which is valid on its face, but void, as a matter of law, due to improper service.” (Ellard v. Conway (2001) 94 Cal.App.4th 540, 544.) “When a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void, and thus vulnerable to direct or collateral attack at any time.” (Strathvale Holdings v. E.B.H. (2005) 126 Cal.App.4th 1241, 1249 (trial court properly granted motion for relief from default and default judgment based on CCP §473(d) where defendants argued there was no valid service of process and they lacked minimum contacts with California).) A defendant may therefore move to set aside a default and default judgment based on improper service and lack of personal jurisdiction under Code Civ. Proc. §473(d). (Id. at 1250.) A defendant need not bring a motion to quash prior to or in conjunction with a motion for relief from default and default judgment pursuant to Code Civ. Proc. §473(d). (Id.) It is always the plaintiff’s burden to establish the existence of jurisdiction. (Id. at 1250-1251; Dill v. Berquist Const. Co., Inc. (1994) 24 Cal.App.4th 1426, 1439-1440.) Thus, even though defendant is the moving party on a motion to quash or a motion to set aside a void judgment under Code Civ. Proc. §473(d), the burden is on plaintiff to establish proper service. (Dill, 24 Cal.App.4th at 1439-1440.) A valid proof of service gives rise to a rebuttable presumption of valid service. (Id. at 1441-1442.) But the presumption may be overcome by contrary evidence. (City of Los Angeles v. Morgan (1951) 105 Cal.App.2d 726, 731.) The statutory requirements of service are construed to uphold jurisdiction, rather than defeat it. (See Pasadena Medi-Center Associates v. Sup.Ct. (1973) 9 Cal.3d 773, 778.) As long as the defendant receives actual notice of the lawsuit, substantial compliance with the Code provisions governing service of summons will generally be held sufficient. (Id.). Tenant argues default judgment should be set aside because he claims he was not properly served with the summons and complaint. However, his declaration fails to aver to that fact and he has not rebutted the presumption of valid service established by the proof of service filed by Plaintiff. To the contrary, Tenant attests “Plaintiff served me with an unlawful detainer case.” (Machicote Decl. ¶12.) Tenant also filed an answer to the Complaint on October 30, 2023, further disproving his claim that he did not receive actual notice of the complaint in time to defend against the action. Tenant next argues he did not respond to Landlord’s Complaint because he relied on “the settlement contract, which [Landlord] signed.” This argument is baffling considering that Tenant did respond to the Complaint. Tenant’s declaration also does not address any purported settlement negotiations or agreement with Landlord, leading to his failure to appear for trial. Tenant then argues that the Court should set aside default judgment because of a declaration of error by his attorney. Tenant, however, submits no such declaration. There is no declaration from counsel at all, much less one attesting that Tenant’s failure to appear for trial was a result of counsel’s mistake. In fact, Tenant avers that he did not retain counsel until he became aware judgment was entered against him. (Machicote Decl. ¶18.) Tenant also argues he should be relieved of the default judgment because he suffers from depression and could not open his mail. Tenant was sent notice of the trial date. The fact that he did not bother to open and read the notice is not excusable neglect. In sum, none of the grounds asserted by Tenant support vacating the judgment against him. For the foregoing reasons, the Court DENIES Defendant’s motion to vacate default judgment. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
Case Number: 23SMCV05488 Hearing Date: February 20, 2024 Dept: 205 Superior Court of California County of Los Angeles – West District Beverly Hills Courthouse / Department 205 | Hearing Date: February 20, 2024 DEFENDANT’S MOTION TO COMPEL |
This case arises from an employment dispute. Defendant TDPV, LP operates a restaurant called Angelini Restaurant & Bar. Plaintiff Leal Juan was employed there as a line cook from January 2022 to September 2023. Plaintiff claims he requested medical leave for an alleged disability as well as complained about health and safety issues. In response, Defendant terminated him on September 7, 2023. The operative complaint alleges eleven claims for (1) disability discrimination, (2) failure to accommodate, (3) failure to engage in an interactive process, (4) retaliation under Labor Code Section 1102.5, (5) wrongful termination in violation of public policy, (6) failure to provide meal breaks, (7) failure to provide rest breaks, (8) waiting time penalties, (9) failure to provide accurate wage statements, (10) failure to timely produce wage statements, and (11) violations of the California Private Attorneys General Act. This hearing is on Defendant’s motion to compel arbitration. Defendant argues that a valid arbitration agreement exists which requires arbitration of Plaintiff’s employment claims. The Court declines to consider Plaintiff’s untimely evidentiary objections to the Declaration of Alessandro Silvestri. Plaintiff was required to raise any objections at the time he filed his opposition on February 5, 2024. Plaintiff did not file his objections until February 13, 2024. Here, the arbitration agreement states: “The arbitrability of any Dispute under this Agreement shall be determined by application of the substantive provisions of the Federal Arbitration Act (9 U.S.C. Sections 1 and 2) (“FAA”).” (Ex. D to Skinner Decl. at p. 82.) The language of this provision is unambiguous: the parties specified that the FAA governs the arbitration agreement. (Cf. Victrola 89, LLC, 46 Cal.App.5th at pp. 343, 348 (contracting parties’ explicit “reference to ‘enforcement’ under the FAA required the court to consider the [defendants’] motion to compel arbitration under the FAA.”).) However, while the arbitration agreement here is governed by the FAA, the agreement may be enforced via the summary procedures provided by California arbitration law. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal. 4th 394, 409-410.) It is a “general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts,” even though the controversy is governed by substantive federal law. (Felder v. Casey (1988) 487 U.S. 131, 138.) By the same token, however, a state procedural rule must give way “if it impedes the uniform application of the federal statute essential to effectuate its purpose, even though the procedure would apply to similar actions arising under state law.” (McCarroll v. L.A. County etc. Carpenters (1957) 49 Cal. 2d 45, 61, 62.) “We think it plain the California procedures for a summary determination of the petition to compel arbitration serve to further, rather than defeat, the enforceability policy of the [FAA.]” (Rosenthal, 14 Cal. 4th at 409.) Code Civ. Proc. § 1281.2 and 1290.2 are neutral as between state and federal law claims for enforcement of arbitration agreements. (Id.) “They display no hostility to arbitration as an alternative to litigation; to the contrary, the summary procedure provided, in which the existence and validity of the arbitration agreement is decided by the court in the manner of a motion, is designed to further the use of private arbitration as a means of resolving disputes more quickly and less expensively than through litigation.” (Id.) As with federal law, under California law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion, 563 U.S. at 339.) To further that policy, Code Civ. Proc. §1281.2 requires a trial court to enforce a written arbitration agreement unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for rescission of the agreement or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by a preponderance of evidence. (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.) It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions. (Gamboa, 72 Cal.App.5th at 165.) The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause. (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.) The trial court then weighs all the evidence submitted and uses its discretion to make a final determination. (Id.) If the court orders arbitration, then the court shall stay the action until arbitration is completed. (See Code Civ. Proc., § 1281.4.) Existence of Arbitration Agreement In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.) Even when the FAA applies, “interpretation of the arbitration agreement is governed by state law principles.” (Hotels Nevada, LLC v. Bridge Banc, LLC (2005) 130 Cal.App.4th 1431, 1435.) Although “[t]he law favors contracts for arbitration of disputes between parties” (Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal.App.3d 526, 534), “there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate[.]” (Weeks v. Crow (1980) 113 Cal. App. 3d 350, 353..)¿ “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 648 (citations and internal quotations omitted); see also Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1518¿ (“Because arbitration is a contractual matter, a party that has not agreed to arbitrate a controversy cannot be compelled to do so.”).)¿¿¿¿¿¿¿ Here, Plaintiff signed an arbitration agreement, agreeing to submit to binding arbitration any disputes “related in any manner to [Plaintiff’s] employment or association with the Company, or termination thereof[.]” (Ex. D to Skinner Decl. at p. 82) The disputes expressly include “claims for violation of public policy, wrongful termination … claims for unlawful discrimination and/or harassment (including but not limited to …. physical disability) … and claims for violation of any federal, state or other government law, statute, regulation or ordinance.” (Id.) Accordingly, Defendant has met its burden to establish the existence of an arbitration agreement. Plaintiff argues that under California law, an employer may not require employees to agree to arbitration as a condition of employment. Section 432.6 of the Labor Code provides that “[a] person shall not, as a condition of employment, continued employment, or the receipt of any employment related benefit, require any applicant for employment or any employee to waive any right, forum or procedure for a violation of any provision of the California Fair Employment and Housing Act[.]” As Plaintiff notes, however, the FAA preempts Section 432.6 where an arbitration agreement is subject to the FAA. (Chamber of Commerce v. Bonta (9th Cir. 2021) 62 F.4th 473, 489.) Here, the arbitration agreement states that FAA governs. (Ex. D to Skinner Decl. at p. 82) Plaintiff argues that the Court should disregard this provision because Defendant failed to present evidence that their operations affected interstate commerce. But “the presence of interstate commerce is not the only manner under which the FAA may apply. … [T]he parties may also voluntarily elect to have the FAA govern enforcement of the Agreement.” (Victrola 89, LLC, 46 Cal.App.5th at 355). Plaintiff’s citation to Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal.App.4th 676 is unavailing. In Lane, the parties’ agreement did not provide that the FAA would govern. To the contrary, it provided that California law would apply. (Id. at 681.) In the absence of an express agreement, the FAA could only apply where the employer made a showing that their operations affected interstate commerce. (Id.) As in Lane, the other case cited by Plaintiff, Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, also did not involve any express agreement that FAA would govern. Instead, the employer argued the FAA applied because its operations affected interstate commerce, but the employer failed to present any declarations or other evidence showing the nature of the employer’s business or the scope of the employee’s work. (Id. at 238-239.) Plaintiff also argues that the cases holding that FAA may apply by agreement of the parties misconstrue dicta in the California Supreme Court’s holding in Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376. Even assuming that were correct, the Court is still bound by the holdings of the Court of Appeals. In any event, Defendant has sufficiently shown its operations affect interstate commerce. (Silvestri Supp. Decl. ¶¶ 2-4.) Defendant obtains its food and supplies from out of state; its customers come from outside California, and it advertises nationwide on the Internet. (Id.) Plaintiff is mistaken in his argument that the FAA does not apply because his job duties did not directly affect interstate commerce. The focus is on the employer’s business, not the individual employee’s duties. (Cf. Scott v. Yoho (2016) 248 Cal.App.4th 392, 401-402 (even though plaintiff was an in-state patient and surgery occurred in California, the defendant’s business affected interstate commerce where doctor advertised nationwide on the Internet, 20 percent of the medical supplies were from out of state, 5 percent of the doctor’s patients came from outside California and medical practice regularly communicated with out of state companies.) The Court must next consider whether the arbitration agreement is unconscionable. Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.) Unconscionability has both a “procedural” and a “substantive” element. (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.) An agreement to arbitrate is unenforceable only if both procedural and substantive unconscionability is shown. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. (Id. at 1280.) Substantive unconscionability addresses the existence of overly harsh or one-sided terms. (Id.) Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165). Both, however, need not be present to the same degree. A sliding scale is applied so that the “more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1317; see also A & M Produce Co., 135 Cal.App.3d at 486.)
Here, while there is unequal bargaining power between the parties, there is no lack of disclosure of the arbitration agreement. (Robinson v. City of Mateca (2000) 78 Cal.App.4th 452, 459 (“Procedural unconscionability requires an inequality in bargaining power accompanied by lack of disclosure of material provisions.”) The arbitration agreement was a stand alone document with a prominent heading of “BINDING ARBITRATION”. (Ex. D to Skinner Decl.) Plaintiff was provided with as much time as he needed to review and sign the agreement. (Silvestri Decl. ¶ 8.) Plaintiff was provided the opportunity to ask questions. (Id.) Plaintiff signed the agreement. (Ex. C to Skinner Decl.) By signing the agreement, Plaintiff acknowledged that he had read and understood the Agreement. Immediately above the signature line, the following paragraph is in capital letters: “I HEREBY ACKNOWLEDGE THAT I HAVE RECEIVED, REVIEWED AND AGREED TO THE BINDING ARBITRATION AGREEMENT … AND THAT I HAVE WAIVED ANY RIGHT TO A TRIAL BEFORE A JUDGE OR JURY IN ALL DISPUTES WITH THE COMPANY.” (Ex. C to Skinner Decl.) In any event, “a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469; see also Serpa v. Cal. Sur. Investigations, Inc. (2013) 215 Cal.App.4th 695, 704 (in the employment context, if an employee must sign a non-negotiable employment agreement as a condition of employment but “there is no other indication of oppression or surprise,”¿then “the agreement will be enforceable unless the degree of substantive unconscionability is high”).) We now address whether the Agreement is substantively unconscionable. “Substantive unconscionability focuses on the one-sidedness or overly harsh effect of the contract term or clause.” (Harper, 113 Cal.App.4th at 1406-1407.) Pursuant to Armendariz v. Found. Health Psychcare Svcs., Inc. (2000) 24 Cal.4th 83, 101, a mandatory employment arbitration agreement must: (1) provide for neutral arbitrators; (2) provide adequate discovery; (3) provide for a written award; (4) provide for relief that would otherwise be available in court, and (5) require no unreasonable costs and arbitration fees to be paid by the employee. (Id. at 102.) The agreement here fully complies with each of the Armendariz factors. First, the agreement requires the use of a neutral arbitrator. The agreement specifically provides: “The parties shall meet and confer to select a specific arbitrator or reputable dispute resolution agreement by mutual agreement. If the parties are unable to agree on a neutral arbitrator or dispute resolution organization, any party may elect to obtain a list of arbitrators from one of the following dispute resolution organizations: Judicial Arbitration and Mediation Service (“JAMS”), Alternative Dispute Resolution (“ADR”), or Signature Resolution Group (“SRG”)..” (Ex. D to Skinner Decl. at p. 83.) Second, the agreement provides for adequate discovery: “The parties shall be entitled to conduct all discovery to which they would have been entitled had the parties’ controversy been filed in court, provided, however, that the arbitrator shall have the discretion to issue protective orders or otherwise limit discovery where reasonably necessary, taking into account the parties’ mutual desire to have a speedy, less-formal, cost-effective dispute resolution mechanism.” (Ex. D to Skinner Decl. at p. 84.) Third, the agreement provides for a written award: “Following the hearing and the submission of the matter to the arbitrator, the arbitrator shall issue a signed and dated written decision and award.” (Ex. D to Skinner Decl. at p. 84) “The arbitrator shall prepare in writing and provide to the parties a decision and award which includes factual findings and the reasons upon which the decision is based.” (Id.) Fourth, Plaintiff will not be required to pay unreasonable costs or the arbitrator’s fees: “The cost of the arbitrator and other incidental costs of arbitration that would not be incurred in a court proceeding shall be borne by the Company; provided, however, that if you are the party initiating the claim, you will contribute an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which you were last employed by the Company.” (Ex. D to Skinner Decl. at p. 85.) Fifth, the agreement provides for all types of relief otherwise available to Plaintiff in this litigation: “The arbitrator selected by the parties shall apply the substantive law (and the law of remedies, if applicable) of the state in which the claim arose, or federal law, or both, as applicable to the claim(s) asserted. The arbitrator is without jurisdiction to apply any different substantive law or law of remedies.” (Ex. D to Skinner Decl. at p. 84.) Finally, the agreement is bilateral. It applies equally to Defendant and Plaintiff. “An arbitration agreement lacks basic fairness and mutuality if it requires one contracting party, but not the other, to arbitrate all claims arising out of the same transaction or occurrence or series of transactions or occurrences.” (Mercuro v. Sup. Ct. (2002) 96 Cal.App.4th 167, 176-177.) Here, the arbitration agreement requires both parties to arbitrate disputes relating in any manner to Plaintiff’s employment or associated with his termination. (Ex. D to Skinner Decl. at p. 82.) The Agreement states, in all uppercase: “BOTH THE COMPANY AND YOU UNDERSTAND THAT BY USING ARBITRATION TO RESOLVE DISPUTES, WE ARE BOTH GIVING UP ANY RIGHT THAT WE MAY HAVE TO A JUDGE OR JURY TRIAL.” (Ex. B to Silvestri Decl. at p. 2.) Plaintiff argues that the arbitration agreement is substantively unconscionable because it contains a wholesale waiver of PAGA claims. But the waiver is not wholesale. The agreement does not preclude Plaintiff from bringing an individual PAGA claim. Indeed, it does not even preclude bringing a representative claim. The agreement states “If a court adjudicating a case involving the Company and you were to determine that there is an unwaivable right to bring a representative action (including, but not limited to, a representative action under the California Private Attorneys General Act (“PAGA”) or other federal, state and local statute or ordinance of similar effect), any such representative action shall be brought only in court and not in arbitration and shall be stayed until the individual claim is adjudicated or resolved in the arbitration proceeding.” (Ex. D to Skinner Decl.) But even if the waiver was wholesale, the agreement contains a severability clause, and the Court can sever that portion of the arbitration agreement and enforce the remainder. (Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906, 1924-1925 (a “wholesale waiver” of a PAGA claim in an arbitration agreement remained invalid, but because the agreement at issue included a severability clause, the agreement was enforceable as to the individual PAGA claim).)¿ Plaintiff’s citation to Navas v. Fresh Venture Foods, LLC (2024) 85 Cal.App.5th 626 is unavailing. There, the employee was forced to waive his right to bring an individual PAGA claim. (Id. at 635.) That is not the situation here. Plaintiff next argues that the agreement is substantively unconscionable because it fails to specify the dispute resolution organization that will administer the arbitration and provides no reasonable procedure for selecting the organization in the event of disagreement. But this failure does not make the agreement unjustifiably one-sided to such an extent that it shocks the conscience, which is the test for substantive unconscionability. (Harper, 113 Cal.App.4th at 1406-1407.) Plaintiff further argues the agreement is substantively unconscionable because Defendant has the unilateral right to terminate or modify the agreement. “[T]he fact that one party reserves the implied power to terminate or modify a unilateral contract is not fatal to its enforcement, if the exercise of the power is subject to limitations, such as fairness and reasonable notice.” ¿(Asmus v. Pacific Bell¿(2000) 23 Cal.4th 1, 16.) In the context of an agreement to arbitrate, several courts have held that a unilateral modification provision is not substantively unconscionable because the implied covenant of good faith and fair dealing limits the employer’s authority to unilaterally modify the agreement.¿(See¿Peng v. First Republic Bank¿(2013) 219 Cal.App.4th 1462, 1467;¿Serpa, 215 Cal.App.4th at 708.) In sum, the Court finds that there is some procedural unconscionability but there is no substantive unconscionability. Section 3 of the FAA requires the Court, upon application of a party, to stay any action involving arbitrable issues until arbitration is completed. Code Civ. Proc. § 1281.4 contains a similar requirement. Since Plaintiff’s claims are subject to arbitration, the Court shall stay the lawsuit pending completion of the arbitration. Based on the foregoing, the Court GRANTS Defendant’s motion to compel arbitration and stay of proceedings. The Court stays all proceedings pending completion of arbitration. DATED: February 20, 2024 ___________________________ Judge of the Superior Court
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